1099 Loans For Non Permanent Resident
Borrower Eligibility Status
Non-Permanent Resident Aliens (NPRAs) are generally eligible borrowers under several Non-QM programs, including those offering Alternative Documentation (Alt Doc) such as the 1099 Only product.There are several loan programs offering 1099 loans for non permanent residents.
- Eligible Residency Classifications NPRAs are non-U.S. citizens who are authorized to live and work in the U.S. on a temporary basis. Eligible visa classifications often include: E, G, H, L, O, P, and TN.
- General Ineligibility & Restrictions While eligible for many Non-QM programs, some residency statuses are typically ineligible, such as those with ITINs (Individual Taxpayer Identification Numbers, unless through a special program) or Foreign Nationals who primarily live and work outside the U.S..
- Location Restriction: Under the our guidelines, Non-Permanent Resident Aliens from the Peoples Republic of China are ineligible for financing in Florida.
Credit and Residency Requirements
NPRAs must establish a strong legal and financial footing in the U.S. to qualify for Non-QM loans:
- Residency and Employment History: The borrower must have been living and working in the U.S. for at least two years.
- Credit History: NPRAs must have a valid Social Security Number (SSN) and have an established U.S. credit history.
- Tax Filing: For borrowers relying on full documentation income (including full doc 1099), they must provide filed tax returns in the U.S. for two years.
- Documentation of Status: Verification of lawful residency status is required. Acceptable documentation includes a copy of the borrower’s valid and unexpired passport and unexpired visa. Acceptable alternatives to verify classification include an I-797 form (Notice of Action) with valid extension dates and an I-94 form (Arrival/Departure Record).
- Visa Expiration: If the visa will expire within three or six months of the loan application or note date, a letter from the employer documenting the borrower’s continued employment and continued visa renewal sponsorship is required.
Income Documentation and Calculation for 1099
The 1099 Only documentation type is an Expanded (Alt Doc) qualification option and requires specialized verification, even for NPRAs:
- Transcript Requirement: For loans utilizing the 1099 method, Wage & Income Transcripts for the year(s) of qualifying income are generally required to validate the 1099 income.
- W-2/1099 Conversion: If a borrower has recently converted from W-2 to 1099, they must still be with the same employer for at least two years or in the same industry/similar role, and must provide a contract.
- Income Calculation: The calculation involves taking the gross 1099 earnings less an applicable expense ratio, often a fixed 10% expense factor.
Loan Structure Limitations for NPRAs
The Non-QM programs apply LTV and transaction restrictions to NPRAs using Alt Doc (1099) income due to the heightened risk profile:
- Maximum Loan-to-Value (LTV): NPRAs are subjected to lower LTV caps compared to U.S. citizens or Permanent Resident Aliens:
- Under the our Connect and our Advantage guidelines, NPRAs using Alt Doc (which includes 1099) are limited to a maximum 80% LTV.
- Under the our Connect Alt Doc matrix specifically, the maximum LTV is 75%.
- Under the Sharp Series, NPRAs have a maximum 75% LTV/CLTV.
- Under the Nations Direct River Series, NPRAs seeking primary residence loans are restricted to a maximum 75% LTV/CLTV/HCLTV.
- Transaction Eligibility: NPRAs are generally restricted to two types of transactions:
- They are eligible for Purchase and Rate/Term Refinance transactions only.
- Cash-Out Refinances are not eligible for Non-Permanent Resident Aliens.
- Property Ownership Restriction (Nations Direct): For NPRAs seeking primary residence financing, there can be no other financed properties in the U.S..
FAQ's
Yes, Non-Permanent Resident Aliens are eligible for financing under various Non-QM programs that offer Alternative Documentation (Alt Doc), such as our Advantage and our Connect series.
Non-Permanent Resident Alien borrowers are generally limited to a maximum 75% LTV under our Connect program. For our Advantage program, NPRAs using Alt Doc are limited to a maximum 80% LTV.
Yes, under our Horizon guidelines, Non-Permanent Resident Aliens from the Peoples Republic of China are ineligible for financing in Florida.
ITIN borrowers, Asylee status, and Foreign Nationals (who do not meet the NPRA definition) are typically listed as ineligible borrowers for these programs.
NPRAs must have a valid Social Security Number(s) and have an established U.S. credit history
Yes, if a non-U.S. citizen is borrowing with a U.S. citizen, non-permanent resident alien documentation requirements still apply.
No, NPRAs are generally restricted to Purchase and Rate/Term Refinance transactions only; Cash-Out Refinances are not eligible.
If the visa expires within three to six months of the loan application or note date, a letter from the employer must be obtained documenting the borrower’s continued employment and continued visa renewal sponsorship.
Required documentation includes a copy of the borrower’s valid and unexpired passport and unexpired visa. Acceptable alternatives include an I-797 form (Notice of Action) with valid extension dates and an I-94 form (Arrival/Departure Record).
NPRAs must have been living and working in the U.S. for at least two years.
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